We are contacting you today to update you on the federal government’s April 1st announcements to provide details on the enhanced wage subsidy and the application process for the Canada Emergency Response Benefit (CERB). Yesterday, Prime Minister Trudeau indicated that the total cost of these two programs will exceed $80 billion.
CANADA EMERGENCY WAGE SUBSIDY PROGRAM
In our previous bulletins we informed you that the government is proposing to increase the wage subsidy plan they previously announced. While it was thought that the new subsidy would replace the previous one, it appears to be in addition to it. As such, those businesses not suffering a 30% drop in revenue will still be eligible for the 10% subsidy.
The initial wage subsidy was limited to 10% of wages and was restricted to most small and medium Canadian businesses as well as non-profit organizations (NPOs) and charities. The maximum benefits are $1,375 per worker and $25,000 per employer. This would be claimed by reducing the business’s payroll taxes. Although the CRA’s website indicated this program was limited to small and medium sized corporations, sole proprietorships and certain partnerships are also eligible.
The new proposal is as follows:
- The subsidy is retroactive to March 15, 2020 and will be effective for the 12-week period ending June 6, 2020;
- Increase the threshold to 75% of wages with employers attesting that they are doing everything to pay the 25% balance;
- The subsidy is based on wages actually paid to employees in the period;
- The employer’s revenue must have decreased by 30%: This is measured by comparing the monthly revenues for March, April and May in 2020 against same period in 2019;
- This may result in a new business being ineligible unless an alternate method to measure the change in revenue is available;
- There may be a different definition of revenue for NPOs and charities;
- It will apply to businesses, large and small, except those in the public sector;
- The wage subsidy would apply at a rate of 75% of the first $58,700 normally earned by employees, representing a benefit of up to $847 per week;
Businesses will apply through a Canada Revenue Agency portal expected to be available in three to six weeks and will need to renew their application monthly. The requirement that the wages be paid combined with the wait time for payments could mean that some employers may not have the financial resources to bring back laid off employees.
The government indicated that a lot of this process will be on the honour system but that there will be severe penalties for those that abuse or take advantage of the program.
Due to the extent of the changes from the initial program, Parliament will need to be recalled to approve the changes. As such, further amendments to these proposals could occur.
You can read the government’s announcement HERE.
CERB APPLICATION PROCESS
You can read about the requirements to qualify for the CERB in our previous announcement HERE.
The government re-iterated that if individuals have already applied for Employment Insurance, they do not need to apply for the CERB. If an individual is not eligible to apply for EI or has not applied for it yet, then they can apply for it through CRA’s website starting on April 6th.
The online portal to apply for benefits will work on a system ordered by birth date:
|If you were born in the month of
|Apply for CERB on
|Your best day to apply
|January, February or March
|April, May or June
|July, August or September
|October, November, or December
|Fridays, Saturdays or Sundays
Detailed instructions on how to apply can be found HERE.
Further updates will be provided once available. We are happy to discuss any questions you may have about these matters.
This summary deals with proposed matters that are complex and may not apply to particular facts and circumstances. As well, the material and the references contained therein reflect laws and practices which are subject to change. For these reasons, this material should not be relied upon as a substitute for specialized professional advice in connection with any particular matter.
Although this communication has been carefully prepared, Wilkinson & Company LLP does not accept any legal responsibility for its contents or for any consequences arising from its use. No part of this document may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means (photocopying, electronic, mechanical, recording or otherwise).